AI millionaires are already blowing up San Francisco real estate prices. Wait until the IPOs show up.
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San Francisco real estate has been too expensive for too long.
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But AI money is driving housing prices in San Francisco sky-high.
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And that’s just the beginning: What happens when Anthropic and OpenAI go public and even more money comes into play?
News item: Last fall, more than 600 OpenAI employees went from paper millionaires to actual millionaires by selling $6.6 billion of stock in the company.
Also news: San Francisco’s real estate market is booming, especially for the luxury millionaires want to live in.
Before we get into correlation/causation: No, we don’t know that every OpenAI employee who cashed out their shares immediately invested that money into condos in San Francisco. But something is going wrong in the local real estate market and Everyone in town believes it’s AI money.
And all this happens before OpenAI and Anthropic are going public, which will bring even more money into an already incredibly frothy market.
That’s because the traditional Silicon Valley wealth cycle has changed. It used to be that you signed on to work at a risky, high-flying startup, and if all went well, your shares in that startup would turn into real money years later when it became a public company.
No more waiting for an IPO: It’s routine for large, valuable private companies to remain private while offering employees and investors a way to raise cash through secondary stock sales before going public.
This is not an artificial intelligence innovation. We’ve been seeing this for years through companies like Stripe. manages routinely share sales minting millionaires for current and former employees without going public. Elon Musk’s SpaceX about to go publichas been doing the same for its employees for years.
But even by these standards, what happened at OpenAI last fall was extraordinary. Wall Street Magazine It was reported that Sam Altman’s company, which had previously limited share sales to $10 million per employee, increased this limit to $30 million and approximately 75 employees sold the entire amount.
And all this new money has arrived in a town that’s already seeing crazy compensation deals for in-demand AI workers who can negotiate NBA-level employment packages — or Convincing Big Tech companies to buy their startups for large sums of money.
